Budget 2017: Funding for 5G despite security and standards fears

In a budget bearing remarkable similarities to that released a year ago by George Osborne, Hammond announces funding for 5G, driverless cars and robotics

Chancellor Philip Hammond has announced his latest Budget in parliament, revealing new funding for research into robotics, 5G and driverless cars.

This funding derives from the previously announced National Productivity Investment Fund (NPIF).

Some have criticised Hammond already for lacking any new thinking, with the Budget announced by his predecessor George Osborne in March 2016 looking very similar, also bringing funding for 5G and driverless cars.

Labour leader Jeremy Corbyn said that the Budget favours only a priviledged few.

The 5G investment in particular is likely to prove controversial, given widespread cynicism around what the technology is. With no currently agreed standards, 5G currently is little more than marketing hype, leaving any impact of investment in the area hard to anticipate.

Some also pointed to security concerns around 5G.

"The Budget today discussed the government's plan to put the UK firmly on the 5G map, claiming the super-fast mobile network will go as far as to revolutionise the healthcare industry," said Raj Samani, CTO at Intel Security. "Exciting as this may be, I'm also extremely concerned. Yes, 5G means we'll see faster and greater levels of data transferred across networks, but with this comes a great security risk - one that could be detrimental to the healthcare industry," he added.

Samani continued: "If security is not addressed by the time 5G becomes a reality, we will become even more vulnerable. We could see cyber criminals accessing our health data at an even faster, uncontrollable rate. When linked up to healthcare systems, insecure health monitors can open the door to personal data that will never change, or "non-perishable" data, such as family names, address history and even your mother's maiden name.

"Don't get me wrong, the progression to 5G offers a lot of benefits to people of the UK, as the Chancellor touched on today. Equally, security cannot be an afterthought, especially when it comes to something as vital as our healthcare. Security must be built in from the start," said Samani.

However the other investments have been more positively received, with Justin Arnesen, director at consulting group Ayming pleased to see administration costs for research reduced.

"It's great to see Philip Hammond announcing policies that will reduce the administration overheads associated with R&D, but until we know what this means in practice, it's hard to gauge the real impact," said Arnesen.

"For a number of years, there has been a generally accepted standard on what constitutes R&D from HMRC's perspective. In recent months, it feels as though the bar has been raised, but there has been a lack clear direction. Companies who have been involved in R&D incentives over the past decade are finding their applications are now being put into enquiry by HMRC with little explanation, and that is inflating the admin burden."

Arnesen said that he would like to see the government provide even better support to UK innovation.

"Hammond's claim that the UK is globally competitive from an R&D perspective does have some merit, but the Government could definitely be doing more to support this area, and other countries are certainly more advanced. Data from The World Bank shows UK R&D as a percentage of GDP sitting at 1.7 per cent in 2014, lagging behind countries such as Germany (2.83 per cent), Korea (4.15 per cent) and the US (2.73 per cent)."

He also sounded a note of caution around Brexit, stating that the UK needs to be clear that it will remain a positive place to do business.

"From an SME perspective, UK companies' net benefit from R&D tax incentives is in the region of 26-33 per cent. In contrast, though, large companies only receive just under 9 per cent. With Article 50 being triggered imminently we need to show that we are open for business. But keeping the tax benefit so low for large companies does nothing to encourage this. We need to do more to incentivise big companies to come to, or stay in the UK and invest in R&D," commented Arnesen.